Overcome these common challenges while applying for a business loan online

Business loans are a great way to leverage your enterprise and meet immediate fund requirements. Small and Medium Enterprises (SME) are usually dependent upon business loans to meet their funding requirements. With the advent of technology and digitization of processes, even the loan application has become online. However, while applying for a business loan online, even though it may seem easier and convenient, applicants may face some common challenges like fulfilling eligibility criteria, good CIBIL™ Score, sufficient documentation, etc. Here's a guide to help you overcome those challenges while applying for the business loan online:

• Fulfillment of eligibility criteria

  Each lending institution has its own eligibility criteria for sanctioning the loan application. Satisfying these criteria is essential; otherwise, lending institutions may outrightly reject the loan application. Therefore, it becomes important for the applicant to fulfill that eligibility criterion to get the funds in their bank account. While basic SME loan criteria and eligibility are the same in most cases, certain considerations may differ among lending institutions. As the eligibility criteria are available online in most cases, the applicants may go through the same to determine whether they fulfill the requirements.

1. Shriram Finance SME loan eligibility and criteria: are relatively simple, considering the nature of SME business and the requirements of their owner. Its criteria include:

2. Age criteria: The individuals should be aged between 23 to 65 years of age

3. Turnover: Professionals and self-employed individuals should have an annual turnover of Rs. 10 lakhs or more. In the case of sole proprietorships, partnerships, or companies (whether limited or private limited), the annual turnover should be Rs. 20 lakhs or more.

Business continuity: The applicant should be in business for at least 3 years.

• SME loan interest rate

  Business loans are usually unsecured. Therefore, the interest rates are generally a little higher as compared to secured loans. Interest charged by the lending institutions is typically dependent upon various criteria like adequate documentation, fulfillment of all the eligibility criteria, CIBIL™ score, and the applicant's profile. Satisfying SME loan criteria and eligibility and all these requirements may become challenging yet essential to secure a lower interest rate. Therefore, it is usually beneficial for the borrowers to compare the interest charged by the various lending institutions and select the most affordable ones. However, it is always in the applicant’s best interest to consider other terms as well, along with the SME loan interest rates.

  Shriram Finance business loan interest rates are some of the most affordable ones considering the needs of the business owners. It starts from just 15% per annum. This, combined with simple Shriram Finance SME loan eligibility and criteria, makes borrowing convenient and straightforward.

• Terms of business loan

  Borrowers should be clear with the terms of the business loan before applying for the same. Different lending institutions have different terms for SME loans, and therefore, borrowers should compare before application. Common terms include processing fees, tenure of the loan, closure charges, repayment flexibilities, etc.

  Shriram Finance charges less than 2% processing fees and provides a loan tenure of up to 60 months. The applicant becomes eligible for loan closure after 6 months with nominal charges of 3% to 6%. It provides flexible monthly repayments to the borrowers.

• Documentation

  Documentation becomes an integral part of the loan application process. It forms the basis upon which the bank gets to know the information about the applicant and his business. Fulfilling all the documentation requirements of the banks may be a bit challenging, considering most borrowers don’t have all the documents handy. Inadequate documentation may result in high-interest rates and other costs. Basic documentation requirements are the same among different lenders. These normally include:

  1. Identity Proof: PAN Card/ Voter ID Card/ Passport/ Driving License
  2. Address Proof: Passport/ Electricity Bill/ Gas Bill/ Driving License
  3. Other Documents: It includes the following
     1. Passport size photographs
     2. Income proof (Income tax returns and audit reports, if applicable)
     3. Financial Statements (Trading account, Profit and Loss Account, and Balance Sheet)
     4. Bank Statements (From last 6 months to 1 year)

• CIBIL Score

  A good CIBIL™ score becomes an important criterion to determine the eligibility for a loan. Without a good CIBIL™, you may have a hard time getting your loan sanctioned and disbursed. Therefore, if not satisfactory, the CIBIL™ score may become another challenge to your loan application. It is the parameter based on which banks determine the creditworthiness of the borrower. CIBIL™ score forms part of the CIBIL™ report that shows the record of your credit performance, including repayment delays, defaults, and hard credit inquiries. Therefore, regular repayment of loans ensures a healthy CIBIL™ score that makes it easier to avail financing in the future.

  However, a lower CIBIL™ score may fail to fulfill the eligibility criteria of the lending institutions. Shriram Finance specializes in providing loans to individuals with a low credit score who face difficulty entering financial arrangements with formal lending institutions.